Is the gold/metal age of 2016 over? Merrill Lynch says it may be gone for now, but not entirely forgotten, after the firm downgraded a few major metal players. The brokerage firm was not overly negative on these stocks but it took somewhat of a neutral stance considering what it sees on the horizon.

Merrill Lynch focused on three firms in the space: Kaiser Aluminum Corp. (NASDAQ: KALU), Nucor Corporation (NYSE: NUE), and Steel Dynamics Inc. (NASDAQ: STLD). Overall Merrill Lynch downgraded all these firms to a Neutral rating.

For Kaiser aluminum, the brokerage firm downgraded to a Neutral rating and cut its price target to $92 on a cloudier aerospace outlook. Merrill Lynch’s view is such that key aero and auto end markets are in the latter stages of prolonged upcycles. The firm cut 2017 estimated EBITDA to $207 million from $213 million and the 2018 estimate to $211 million from $228 million. Merrill Lynch also pointed to a typically seasonally slower second half ahead.

Merrill Lynch continues to think Nucor represents a relatively attractive investment opportunity within its coverage, but expects limited catalysts on falling steel prices and more recent full valuation. The firm’s unchanged $56 per share price objective uses a 7.5-times multiple from 2017 estimated EV/EBITDA, up from its historical average 6.9-times, which Merrill Lynch thinks is deserved given its greater value-add exposure and product diversity. Uses of cash can be a key driver ahead given a sizable cash hoard.

As for Steel Dynamics, Merrill Lynch detailed in its report:

We downgrade Steel Dynamics to Neutral after a strong rise in share prices on the view that steel prices have run out of steam. Second quarter results were a beat, but the outlook was softer than expected and we lowered estimates and see consensus at risk. We continue to like Steel Dynamics on a relative basis, but expect discounted import tons to pressure sheet steel markets into the fourth quarter.

Our new $28 per share price objective values shares using a 7-times 2017E EV/EBITDA on lower 2017E, which reflects a more cautious view on its high-margin rail and engineered bar products, where conditions had been weaker than we expected. The multiple compared with its five-year average forward 6.3-times EV/EBITDA, is justified in our view given the greater cash flow outlook ahead and more diversified geographic/end market mix. Steel Dynamics remains a top pick in U.S. steels due to its value and historical strategic cash uses for growth.

Shares of Kaiser were last trading down over 3% at $85.85, with a consensus analyst price target of $88.14 and a 52-week trading range of $70.14 to $96.06.

Shares of Nucor were recently trading down about 3% at $54.12. The stock has a consensus analyst price target of $53.73 and a 52-week trading range of $33.90 to $57.08.

Steel Dynamics stock was last trading down about 1.5% at $26.44. The stock has a 52-week trading range of $15.32 to $28.01 and a consensus analyst price target of $29.81.

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